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Navigating Mortgage Refinancing:

Your Essential Handbook for Canadian Homeowners

Discover how a mortgage refinance empowers homeowners to reduce their interest rates, adjust loan terms, consolidate debt, or leverage home equity for cash.

Explore the mechanics of refinancing, including eligibility criteria, associated expenses, as well as the advantages and disadvantages. Get started with PowerHaus today.

What Is Refinancing A Mortgage?

Mortgage refinancing entails replacing your current mortgage with a new home loan featuring altered terms. It’s crucial to note that ending your mortgage prematurely incurs a financial penalty. When considering refinancing, carefully assess the benefits and costs in alignment with your refinancing objectives. Partner with PowerHaus to make informed decisions.

What Is Refinancing A Mortgage?

Generally speaking, there are a few primary reasons to refinance a mortgage.

Secure A Lower Interest Rate

If mortgage interest rates have decreased since you secured your current loan, refinancing at a lower rate could lead to substantial savings. Assessing whether this option is viable for you entails ensuring that your potential savings outweigh the costs associated with the prepayment penalty for terminating your mortgage prematurely. Trust PowerHaus to help you navigate this decision effectively.

Make Other Changes To Your Mortgage

Beyond securing a potentially reduced interest rate, a refinance can also serve to substitute your product type, alter your rate, or extend your amortization period to enhance cash flow. Let PowerHaus guide you through these strategic refinancing options.

Turn Home Equity Into Cash

Through a cash-out refinance, homeowners with over 20% equity in their property can swap their current mortgage for a larger loan, receiving the surplus amount as a lump sum. This cash infusion can be utilized for consolidating high-interest debt, financing home enhancements, acquiring investment properties, and other purposes. Explore the possibilities with PowerHaus.

Refinancing Requirements

Lenders have certain requirements you have to meet to refinance your mortgage.

Home Equity

Your home equity represents the disparity between your current mortgage balance and your home’s appraised value. For example, if your home is valued at $400,000 and you owe $200,000 on your mortgage, you possess 50% equity. Typically, lenders mandate a minimum of 20% equity for refinancing. During the application process, they’ll conduct a home appraisal to validate its worth. Trust PowerHaus to guide you through this essential step in refinancing.

Credit Score

Typically, lenders seek a credit score ranging from 500 to 650 for mortgage refinancing. Nevertheless, the precise score required can vary based on factors like the lender, loan type, and property. If you plan to withdraw cash, a higher credit score might be necessary to access larger equity amounts. At PowerHaus, we’ll help you understand the specific credit score requirements tailored to your refinancing needs.

Debt Service Ratio (DSR)

The debt service ratio (DSR) represents the percentage of your gross monthly income required to cover your recurring monthly debts.

Your DSR consists of two components. The first is your gross debt servicing (GDS) ratio, indicating the portion of your gross income allocated to housing expenses. The second component is your total debt servicing (TDS) ratio, encompassing all recurring monthly debts such as housing costs, car payments, student loans, and credit cards.

Lenders evaluate your GDS and TDS during a refinance application to assess your ability to repay the new mortgage. Generally, a GDS and TDS below 50% are required to qualify for refinancing.

Financial History

Your financial history and overall financial health significantly influence the refinancing process. Therefore, you’ll need to submit various documents as part of your refinance application for consideration.

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Dominion Lending Centers National Ltd.

Powerhaus Mortgage Experts – Independently Owned and Operated

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